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June 1, 2010 / Jeb

Prepare For a Bear, European Debt Crisis Will Cause Another Wave Down

The failure to regain the 200 day moving average and the market breadth is very negative.  Indicators remain very sold but the overall bearish breadth and the breakdown of many indices I use make me bearish.

I am opening positions in short inverse etf’s such as DXD and SDS to protect my equity positions.  I have been stopped out of everything except TGB, GMO, UXG and NGD.

Gold is very strong right now, but I expect silver to follow soon.  With all the debt the USA is getting itself into I can not buy treasuries or the dollar.

The chart I want to highlight is the investment grade bonds etf.  These are the top most secure investment instruments and when I begin to see a major trend change that is telling me smart money is extremely cautious over sovereign debt and the overall global economy.  It also tells me the market is concerned over debt downgrades from major companies.

The investment grade bond etf LQD which invests in the most secure debt of major blue chip companies has finally broken below the 200 day moving average and long term trend support.  Momentum is waning and price volume action is poor.

Markets are showing continued weakness and an inability to rally off these extremely oversold levels.  There are signs of a major market downturn from the global credit concerns.

I recommend holding good gold and silver investments and to protect now using inverse etf’s such as SDS the short SP500 and DXD Short Dow.

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2 Comments

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  1. Tuni / Jun 1 2010 9:58 pm

    I totally agree with your analysis. I went long TZA, EPV, SKF, and TWM last month. Its been a bit bumpy getting batted about the 200 day moving average but am looking forward to some good profits in the mid term.

  2. jake / Jun 2 2010 6:29 pm

    Obama hinted today to expect good news tomorrow on employment #’s!!Maybe we get to s&p 1150,then short??

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